All posts tagged sands

The oil industry’s desire to lift the 40-year-old ban on exporting U.S. oil faces some significant hurdles from Congress, but there may be a way regulators can give companies at least part of what they want – by allowing them to export a petroleum byproduct called “condensate.”

Of the roughly 8 million barrels of oil that U.S. companies are pumping every day, about 1 million barrels are actually condensate, a liquid that’s closer to natural gas than oil. It’s used for a variety of purposes, including as a dilutent to help heavy crude flow through pipelines and by chemical plants to create the building blocks for plastics.

The language used to craft the 1970s rules limiting U.S. oil exports says that condensate that comes directly out of the ground in liquid form can’t be exported. Yet a nearly identical form of condensate that is stripped from natural gas at a processing plant can be exported – with much of it going to Canada for diluting crude from tar sands.

A boom in oil production Utah has increased the state’s output to the highest level in 25 years, but that rising tide also is giving a lift to more exotic plays: petroleum trapped in sand and hard shale rock.

Eastern Utah has the largest oil sands formation in the U.S. as well as extensive oil shale rock resources—not to be confused with the shale oil extracted from the Bakken formation astride the North Dakota and Saskatchewan border. These have never been economically viable in the U.S., but a combination of advances in technology and higher crude prices has led to several new proposals for open pit mines in and around the sagebrush-covered Uinta Basin.

Among the most aggressive proponents are Calgary–based US Oil Sands Inc. and Enefit American Oil, the U.S. unit of Estonia’s state-run utility. But both companies’ projects have triggered fierce opposition from environmental groups and a healthy dose of skepticism from critics who doubt their viability.